During his time as a Duke of Liao, he continued the trade policies which brought so much success to his father and further expanded the merchantile fleet the Liao family controlled.

During this time, he was approached by Prime Minister of the Capellan Commonality Seluk Tucas who wed him with his daughter Caroline Tucas, giving Franco a devoted wife and further helping his political ties with the Capellan Commonality.

After the Debacle on Lee in 2363, Seluk Tucas' position as a Prime Minister was being challenged by his opponent Warren Aris. To rectify his mistakes, Seluk Tucas ordered a general election for the post in 2365, but he died during a bombing attack before the election began.

After the sabotage of elections of 2365 by the FWL and FS, the Capellan senate ordered a new election in 2366 which failed too. Quickly seizing the chance, Reynard Davion assembled a peace-keeping force to "occupy Capellan until a suitable governing body could be elected."

Capellans had to act fast and they decided to hold a meeting on St. Andre to solve the immediate threat all the Capellans faced. On this meeting, Franco Liao proposed a radical solution of dissolving the Capellan Commonality and creating a new Pan-Capellan union with him as its ruler. Warren Aris immediately accused him of trying to become a dictator, but Franco Liao struck back when he announced that if any party supports Warren's claims, he would order a blockade of St.Andre by his fleet.

After hours of discussions, Franco's wife, Caroline, decided the fate of the realm by coming to her husband, drawing his ceremonial sword and pointing at him, swearing that if he ever tried to threaten the freedom of the Capellan people and become a distator, she would personally kill him by that very sword. This event convinced the attendees and with the assurance of it being temporary, they voted Franco Liao as the new Prime Minister of the Capellan Commonality.

After Franco Liao won the elections, he wasted little time and immediately dissolved the Capellan Commonality and created the Capellan Confederation in its stead, ending the Aris Crisis once and for all. He then proclaimed himself a Chancellor of this new realm and offered the post of Deputy Chancellor to Warren Aris, who refused it.

Franco had him arrested for it and confiscated the Aris' own property for the state, which he then gave to the ten newly appointed military commanders of the Capellan Defense Force, two from each Commonality of the nation and gave them appropriate authorities. With the military handled he turned to the nobility. He created an advisory council the House of Scions and used appointment to it to buy the loyalty of most of his opponents. His wife, Duchess Caroline, became the first President of the House of Scions.

He then rushed to save the capital world of Capella from the Davion occupation force. He sent messengers to the Davion fleet commander, informing him of the new government and suggesting new negotiations between the Federated Suns and the Confederation on New Avalon, although in reality, this was done to buy the time he needed to get to Capella ahead of the occupation force.

Once he got there, he set a bold plan in motion. He had ordered the most elite units of the new Confederation Army and Navy to assemble, with the naval units rendezvousing within a jump of Capella and he himself barely got off world before the Davion forces arrived.

When the Davion forces landed, they found hardly any resistance on planet besides a bit of sabotage and irregulars. Three regiments moved to occupy the capital city, Capella Prime. The next day, reports of combat in orbit began to filter down. Soon, the troopers on the ground could see the evidence with their own eyes as elements of the St. Ives and Sarna navies, together with the bulk of Franco Liao’s fleets, attacked the Davion ships in space. In seven hours of battle the Confederation annihilated the supply ships, transports and escorts that had brought the occupation force to Capella. With space superiority achieved, the Chancellor called on the Davion troops to surrender unconditionally. The Davion commander refused the offer, knowing he was in a perfect defensive position where the Capellans could not attack him. Once the time given by Chancellor Franco Liao expired, to the horror of Davion troops in the city, the Confederation Navy started bombing the town. Along the casualties of the bombardment were three whole elite Davion regiments and 2 000 citizens who stayed in the city.

With the immediate Davion threat removed, Franco Liao moved the capital of the Confederation to Sian where it remains to this day. To honor the sacrifice of the citizens of Capella Prime, Franco Liao ordered a black border to be added to the national crest.

Less successful in dealing with Marik, the FWL had steadily gained new Capellan border worlds beginning in 2366. Franco Liao willingly traded these worlds for getting enough time to get all the Capellan Commonalities to accept his Unity Statement.

During this time, the Tikonov nobility known as Sheng was one of the main opponents of the Franco Liao's Articles of Confederation, as they feared it would diminish their ancestral priviledges and they hired their own troops to protect them. Franco Liao turned a blind eye to them until the February of 2368, when the troops of Baron TChigorin seized New Hessen's munitions depot claiming it was to protect it from an anticipated Davion attack. Franco Liao saw through the ruse and quietly moved non-Tikonov regiments onto the planet. Once the forces clashed, the munitions inside the depot caught on fire and the Baron's forces routed with himself dying in the fire that followed. After this, most of Sheng forces were disbanded and the rest merged with the Confederation's regiments. By this time, four of the Confederation's five (Tikonov only agreed of Franco Liao when he pledged all of his personal fortune to give guaranteed state pensions and free medical care upon retirement to all Capellan citizens[2]) states agreed to the Franco Liao's proposal for unification.

During the 2390s, Franco had finally created all the needed govermental apparatus that was needed to sustain the state. After he saved the state from the Davion/Marik threat and created a stable nation, Franco Liao did his last great act by creating the Capellan Hussars out of the best each of the Confederation's states had to offer. After this was done, he retired along with his wife to the planet of Liao in 2395, leaving the post of the Chancellor empty.

Franco inherited a variety of habits from his ancestors and thought of himself as an accomplished bagpipes musician, which resulted in funny situations in his palace like his staff all having cotton stuffed in their ears.

Like his father before him, he was a great tradesman and good politician, but he was never much into military as the continued successful Free Worlds League aggression during his reign proved.

In the strength of the state lies the safety of the people; from one to the other, and neither alone. This is what makes Capellans strong. This is what gives us strength, and balance where others have none. Yin and yang-man and nation.

I am not as other men. I alone, because of my position, know what true goverment is. I am persuaded that no one save me could govern the Capellan people at this time. Were I to die, it would be a great misfortune. Does that sound ridiculous? Remember, power is never ridiculous.

I shall never permit anyone to insult me by treating me as if I were nothing but mere President.

In few other areas of space could you find such a disparate group of rabid independents who share so many views on so many issues. We were like family already, in the Capellan Zone. Certainly we fought like brother and sisters.

I'd make a pact with the Devil herself if only I could straighten this mess out to my advantage. Of course, the devil would have to promise me 30 seats in the senate and two battalions of jump troops before I'd let her to make a appointment.